In recent weeks, the gaming industry has seen a series of price adjustments across major console manufacturers. Microsoft raised the prices of all its Xbox Series consoles and many accessories globally, and announced that some new games would be priced at $80 this holiday season. Shortly before, PlayStation increased console prices in select regions, and Nintendo adjusted the prices of its Switch 2 accessories while announcing its first $80 game. These moves signal a broader trend driven by tariff-induced price hikes that are affecting the cost of gaming across the board.
To understand these developments, I consulted a range of industry analysts. The consensus was clear: tariffs, coupled with rising development and manufacturing costs, are the primary drivers behind these price increases. Dr. Serkan Toto of Kantan Games, Inc., pointed out that Microsoft's decision to raise prices globally was a strategic move to leverage the current economic climate and minimize consumer backlash. "Microsoft's consoles are made in Asia, so seriously: who in this world can now be surprised about these price hikes?" he remarked, highlighting the inevitability of these adjustments.
Joost van Dreunen from NYU Stern echoed this sentiment, describing Microsoft's approach as "ripping off the Band-Aid all at once rather than death by a thousand cuts." He noted that the company's synchronized global price adjustment was a strategic response to tariff pressures, aiming to consolidate consumer reactions into a single news cycle while maintaining competitive pricing.
Other analysts, including Manu Rosier from Newzoo and Rhys Elliott from Alinea Analytics, also emphasized tariffs as a key factor. Rosier noted the strategic timing of the price increase, allowing partners and consumers time to adjust. Elliott explained that while digital software would not be directly affected by tariffs, the price increase on games would help offset the higher costs of hardware manufacturing.
Piers Harding-Rolls from Ampere Analytics added that macroeconomic factors, such as persistent inflation and supply chain costs, also played a role. He noted that the launch price of the Switch 2 and Sony's recent price hikes provided a favorable context for Microsoft's move. He also suggested that the U.S. market, being the largest, faced the heaviest percentage increases due to tariff policies.
Blinking Third
The question now is whether Sony will follow suit with similar price increases on PlayStation hardware, accessories, and games. Analysts largely agree that this is likely. Rhys Elliott was particularly confident, predicting that PlayStation would also increase software prices, stating, "This is just the beginning." He suggested that with Nintendo and Xbox leading the way, other publishers would follow, as the market could bear higher prices, evidenced by gamers willing to pay $100 for early access to certain titles.
Daniel Ahmad from Niko Partners noted that Sony had already raised console prices in regions outside the U.S., but hinted at potential increases in the U.S. market due to its significance. James McWhirter from Omdia pointed out Sony's exposure to U.S. tariffs due to its manufacturing in China, and suggested that the timing of Microsoft's adjustments might prompt Sony to act.
Mat Piscatella from Circana was more cautious in his predictions but referenced the Entertainment Software Association's concerns about the impact of tariffs on video game prices. Meanwhile, Nintendo hinted at considering further price adjustments if tariffs continue to fluctuate.
Video Games Are Fine... But Are We?
Despite these price hikes, analysts do not foresee significant harm to console manufacturers. Microsoft's recent 'This Is An Xbox' campaign suggests a shift towards a service-based model, potentially mitigating the impact of reduced hardware sales. Piers Harding-Rolls predicted a continued decline in Xbox hardware sales but noted a potential boost in Q2 2026 due to the launch of GTA 6.
Rhys Elliott and Manu Rosier suggested that overall spending on games might not decline but could shift towards subscriptions, discounted bundles, and live-service games. Harding-Rolls highlighted that the U.S. market might feel the impact more due to localized tariffs, while Daniel Ahmad pointed to growth potential in Asian and MENA markets.
James McWhirter noted that while full game prices have historically not followed inflation, the quick move to $80 games by Xbox and Nintendo suggests that other publishers will follow. He emphasized that sales volumes would not be directly impacted, especially with a strong content pipeline in 2025, but publishers would continue to explore value-adding strategies post-launch.
Mat Piscatella expressed more caution, suggesting a shift towards free-to-play and accessible gaming options, such as Fortnite and Minecraft, as consumers adjust to rising everyday costs. He warned of potential declines in gaming spending in the U.S., given the broader economic uncertainties.
Overall, while the gaming industry is navigating through these price hikes, the consensus among analysts is that the sector remains resilient, with shifts in spending patterns rather than outright declines. However, the uncertainty in the market makes forecasting challenging, and the future remains unpredictable.
